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I could see that the government may try this again. The US debt is continuing to grow. It is not unthinkable that the "necessity" argument might raise its head once again in the near future. Only time will tell.

The cyclical news story of s "looming debt ceiling crisis" that never happens has (mis)led Americans to believe that default won't ever happen. But... The debt keeps rising. Our president is the self proclaimed "king of debt." And now Edwards reminds us: "Those who cannot remember the past are condemned to repeat it." (George Santayana)

Since the USD is not convertible on demand to any finite resource (such as gold), or pegged to any foreign currency, it is impossible for the US to default on debt denominated in USD. There is therefore no such thing as an "unfunded liability" in USD - that is gold standard era thinking. Same logic applies to any other currency issuing government that is nether resource-backed not pegged.

The welfare unfunded liabilities are backed by the law (ultimately enforced by the Supreme Court rulings). They are mandatory.

On the other side, anyone at his own will can reject the (unbacked) Federal Reserve Note. As you know the "US dollar" does not exist legally. While at the same time the liabilities would stand.

The day the US Supreme Court chooses to truly enforce the US Constitution, it would rule the Federal Reserve Note as unconstitutional and counterfeit tender. As we all know, a Note (debt) is no money, despite it is still accepted as a means of exchange.

President Andrew Jackson accomplished an unprecedented feat Jan 8, 1835- to pay off in its entirety the US national debt. This was the only time in history we were a country with no national debt. Sadly, our debt-free status lasted but a year.

Turn to Brazil as ex-president Lula, currently serving 10-years in prison for money laundering and billions of dollars worth of bribes, has further tarnished Brazil's reputation. Albeit, we live in a different world as internet and social media platforms have elevated the voice of the common.

Our current president has "restructured" and "renegotiated" his financial matters a multitude of times... In many cases bankrupting those caught in his vortex. He also argued "necessity". I suppose "collective amnesia" prevailed in the 2016 elections.

Will it happen again? Depends if Trump wins a second term. In my opinion... not likely.

When Nixon took the $US off the gold standard you could buy three Morton TV dinners for a dollar. Now -a-days you can buy an i-tune. People hold dollars not because they are 'safe' but safer than alternatives. As Russo-Chinese and Indian trade, along with other countries, develops an alternative means of payment (especially in reaction to US interference with SWIFT) the position of the $US presumably weakens, I guess: but if/when they also develop an alternative funding security, the $ would be done for?

All governments in financial turmoil will always succumb to the "necessity" argument if they believe marginal benefit is greater than marginal cost. I see similarities at the individual/corporate level, when debt collectors agree (begrudgingly) to partial payments to eek out some of the debt that the debtor otherwise would not have collected.

Scary - Makes me think about what I can do to protect myself from a future situation like this. My generation is already assuming zero social security payments as part of our retirement savings plans. But what else should we consider and how can we mitigate the risks?

In the next 4 to 7 years there will be a dramatic restructuring of the global central banking system. No doubt the figures noted here would support that 'necessity'. For now the current administration is focused on a turnover of the compromised members of legislative branch (note the dozens of congressmen/senators resigning), the dismissal and criminal prosecution of multiple currupt former FBI and DOJ high level personal (as well as former members of the executive branch), the ending of the funding of terrorism in the ME and elsewhere, and the eventual dismantling of the CIA. The December 21, 2017 EO will go a long way in reducing the national debt and liabilities. A clearer picture will emerge in the next 2 to 3 years at which point the current administration will have a financial solution best for the working people, instead of the elite globalist political class.

This article raises a very pertinent debate. US debt is unprecedented and at record levels. Nobody knows when the debt will break the dam (so to say) and no one in the high-offices seems to be paying any serious attention to this very grave issue, or make an effort to move beyond 'politics as usual'. Former Fed chairman Alan Greenspan has often sought to highlight this issue. In the light of this, this article reminds us, with a history lesson, that the 'unlikely' is perhaps much closer to reality and with real consequences.

This article raises a very pertinent debate. US debt is unprecedented and at record levels. Nobody knows when the debt will break the dam (so to say) and no one in the high-offices seems to be paying any serious attention to this very grave issue, or make an effort to move beyond 'politics as usual'. Former Fed chairman Alan Greenspan has often sought to highlight this issue but, in my opinion, albeit too late. (https://www.wsj.com/articles/SB10001424052748704198004575310962247772540). In the light of this, this article reminds us, with a history lesson, that the 'unlikely' is perhaps much closer to reality and with real consequences.

In my opinion, the short answer is yes. Governments may once again invoke "necessity" to adjust contracts and get rid of liabilities. However, I do think that with the current global landscape, it would be more difficult for the US to merely decide on this and not get severe pressure from the international market. Nonetheless, I still think it is possible and also wonder if in recent history we haven't experienced anything somewhat similar to the 1933 move. For example, 2008, were the bailouts (TARP) to some extent an arbitrary decision out of "necessity," ignoring any rules and using taxpayers' money to cover costs related to the private sector?

A silly article. Executive order 6102 had just forbidden private ownership of gold. If the gold clause were invoked the gold would immediately go to the Government. The Executive order was itself legal because of the 1917 Trading with the Enemy Act was still in force.Nobody was defrauded, there was no default, because everybody had plenty of time between 1917 and 1933 to rewrite contracts or hedge appropriately.Why is the author dredging up this ancient history? Does he think any country facing war will permit capital flight in the shape of gold? When, in history, have sovereign states NOT had a power of this sort? How can one say contracts have been interfered with in some malign fashion where the same law applies to all whether or not they have a contract? The only thing that was avoided was a costly machinery which would have confiscated gold at the time it was tendered. That's plain silly.

Why is the author saying 'the US behaved like a banana republic?' Is he under the impression that the US was a net debtor? When a 'banana republic' borrowed money from London and Paris and New York and then refused to repay that money, the big powers sent gunboats who took control of the Customs House till they were repaid. A powerful country which reneged would be frozen out of international capital markets. Does the author think anything like this happened to the U.S under F.D.R?

Why is the author quoting some silly fellow who said 'Shame and humiliation are upon us now. Moral and financial chaos may be confidently expected'? The US suffered no shame or humiliation. Far from descending into moral and financial chaos, it became the undisputed leader of the free world able single handedly to lift Western Europe out of Post War devastation.

Americans are not stupid. The author is- for suggesting that there was any breach of the rule of law or the sacred nature of the contract. Firstly, the action was perfectly lawful. Secondly, no party to any contract was disadvantaged unfairly. On the contrary, they were relieved of a costly and onerous enforcement mechanism.

The Government is legally empowered to levy taxes on wealth and income and expenditure an imputed income and so forth. So long as no party is denied due process, it can always create assets equal to its liabilities on the basis of its right to levy taxes.

External debt is a separate matter. However, capital markets are scarcely managed by babes in the wood who share the absurd belief of this author that 'America- that too under F.D.R- acted like a banana republic and so forth.

I appreciate that Professors need to sell their books but they can't treat the paying customer as a complete moron! It is folly to cast 'false light' so as to dash of a 'clickbait' type article. Editors should also caution academics to damaging their own reputations, and that of the institutions they are associated with, by writing in a careless and condescending manner.

Nixon suspending convertibility to gold in August of 1971, ending the Bretton Woods system, and thereby moving the USD to a free-float greatly increased the power of the Fed. The ability of the Fed to make large raises in the FF rate (Volcker in '79), or QE (Bernanke '09) are examples of restoring actions which would not have been possible in the 1930's. Conversely, the power of the Fed has also had an impact on behavior of market participants. The Greenspan Put over the last 3 decades has created a market environment where participants engage in excessively risky behavior (i.e. MBS bubble, current equity bull-run) with the knowledge that the Fed has an "insured" against a financial collapse. The Greenspan Put is effectively a moral hazard and has resulted in mechanical issues with the lower bound. An analogy for interest rates is "taking one-step forward and two-steps back". Unfortunately, 10 years removed from the GFC, with a massive balance sheet to unwind still, and the largest fiscal deficit, its becoming clear that another mechanism will be needed to fight the next coming crisis. Perhaps default is part of the new insurance plan...

Legislative retro-action is merely another mechanism to pursue federal equilibrium. Retrospection affords rose-tinted glasses; in order to evolve and sophisticate our financial, social, and political health, it is reasonable to invoke these “necessary” rights.

The US also elected not to repay France after the French Revolution, claiming the deal was made with the French Monarchy and not the French Republic thereby voiding the debt. Although a different set of circumstances, it shows that under the right conditions, it's entirely possible that government debts are not always repaid.

The French had already got their money's worth. Haiti had to repay France. America did not. Many American states defaulted during the first half of the Nineteenth Century. So what? Common knowledge of a particular type existed such that legal outcomes were in line with the ex ante Nash equilibrium. No 'due process' type inequity arose.